New Chair Seeks Confidence at Islami Bank

Islami Bank’s interim Chairman Mohammad Zahir Hossain has urged depositors to resume normal banking activities, following nearly two weeks of instability at the Shariah-based lender. Speaking at a press briefing after assuming office, he called on customers to maintain confidence and continue transactions without hesitation.

“Continue your transactions without hesitation and keep faith in the bank,” Zahir stated. He confirmed that steps were already underway to establish a new board of directors as quickly as possible. According to him, a five-member board is being formed through a vetting process to ensure the inclusion of qualified, competent and fully neutral individuals.

Zahir, who serves as an executive director at Bangladesh Bank, is currently acting as a one-member board on a temporary basis to ensure continuity of operations during the transition period. He expressed optimism that a balanced and independent board would soon be visible.

The development follows a decision by Bangladesh Bank on Sunday night to dissolve the entire board of directors of Islami Bank. The move came amid significant deposit withdrawals, public protests, and political controversy linked to the appointment of Md Khurshid Alam, a former deputy governor of the central bank, as chairman.

Representatives of the Conscious Customers Forum, which has been protesting since 1 June, described the removal of the board as an “initial victory”. At a briefing, forum representative Nur Nabi Manik presented a seven-point demand. These included the immediate formation of a full board comprising honest and professional individuals through consultation, reinstatement of former managing director Md Omar Faruk, and the return of shares allegedly taken forcibly from previous owners.

The forum has announced plans to submit a memorandum outlining these demands to the governor of Bangladesh Bank.

However, Zahir clarified that reinstating Omar Faruk would not be possible. “As his resignation has been accepted, there is no scope for bringing him back,” he said.

Despite the easing of tensions, customers were again seen in large numbers at several bank branches. Acting Managing Director Md Altaf Hossain reported that withdrawal pressure had decreased compared to previous days. To support liquidity, Bangladesh Bank provided an additional Tk 2,500 crore, although the entire amount was not utilised.

Hossain also indicated that confidence among customers may be gradually returning. At one major branch, account closures reportedly declined by around 75 per cent, suggesting a reduction in panic-driven actions.

To stabilise operations further, Islami Bank has instructed its branches to reactivate deposit accounts that were closed prematurely. These include MTDR (Mudaraba Term Deposit Receipt), MSB, MMPDS and MSS accounts that became inactive or were closed amid the recent situation. Customers who closed such accounts between 1 June and 15 June may apply to reopen them within the next seven working days, after which normal banking facilities will be restored.

Branches have also been directed to contact affected customers through mobile communication and other available channels to encourage the resumption of transactions and improve cash flow.

The Association of Bankers, Bangladesh (ABB) has welcomed the central bank’s decision. In a statement, ABB Chairman Mashrur Arefin described the move as “timely and prudent”. He noted that the issue had extended beyond a single institution and was affecting the wider banking sector.

ABB further expressed hope that the decision would help restore stability and rebuild confidence among depositors, investors and stakeholders, while contributing to improvements in governance, accountability, reduction of political influence, and recovery of defaulted loans.

A summary of key developments is presented below:

The ongoing measures are aimed at restoring normal banking operations and stabilising depositor confidence at Islami Bank.